The Post Office Monthly Income Scheme (POMIS) is a popular choice among senior citizens in India. Designed to provide regular monthly income and ensure financial security, POMIS has become a favorite for retirees and anyone looking for a reliable income stream over the long term.
The main objective of the POMIS is to provide an assured monthly return to account holders and help them create guaranteed regular income.
Although it offers no tax incentives, it is a popular instrument among small savers for the government backing that it enjoys.
Let’s dive into the key features, benefits, and how you can open a POMIS account.
Post Office Monthly Income Scheme
Tenure:
POMIS has a maturity period of 5 years, ensuring you get a stable income for a substantial duration.
Eligibility:
You can open an account as a single adult, jointly with up to two other adults, as a minor above 10 years of age, or as a guardian on behalf of a minor or a person of unsound mind.
Deposit Amount:
When started deposits in multiples of Rs. 1000, with a maximum of Rs. 4,50,000 in a single account and Rs. 9,00,000 in a joint account were allowed. In Budget 2023-24 it was revised. The maximum deposit limit for the monthly savings scheme is enhanced from Rs.4.5 lakh to Rs.9 lakh for a single account and from Rs.9 lakh to Rs.15 lakh for a joint account.
Interest Rate:
As of June 2024, the interest rate is 7.4% per annum, paid out monthly. The rates are revised and notified every quarter by the Department of Small Savings.
Premature Withdrawals:
You can withdraw your money after one year, but some deduction conditions exist. The penalty varies from 1–2 percent, depending on the completed tenure of the account.
If the account is closed on or before the completion of three years of opening the account, an amount equal to 2 percent of the deposit is deducted and the remainder is paid to you.
If the account is closed after the completion of three years after opening the account, an amount equal to 1 percent of the deposit is deducted and the remainder is paid to you.
Nomination:
You can nominate someone to receive your account benefits.
Advantages of Post Office Monthly Income Scheme
Regular Income:
POMIS gives you a dependable monthly income, making it ideal for retirees or anyone needing a consistent cash flow.
Security:
Backed by the Government of India, POMIS offers complete capital protection, making it a safe investment option.
Easy Accessibility:
You can open a POMIS account at any post office in India, which makes it very accessible.
Transferability:
You can transfer your account from one post office to another without any cost, which adds to the convenience.
Continuation of Joint Accounts:
If you have a joint account and one of the depositors passes away, the surviving joint holder(s) can continue the account within the prescribed limit.
Reinvestment Option:
When your POMIS matures, you can reinvest, ensuring your investment strategy continues smoothly.
Disadvantages of Post Office Monthly Income Scheme
Taxation:
The interest you earn is taxable, but no Tax is Deducted at Source (No TDS).
Tenure:
The tenure is too short for a retiree. If the rates decrease it may lower his monthly gains when reinvested on maturity.
Returns:
The overall returns from POMIS have been less than a hybrid fund & equity fund. While it is safer than equity-linked products, a disciplined investor gets fewer returns in the medium to long term.
How to Open a Post Office Monthly Income Scheme Account
Opening a POMIS account is simple and can be done at any post office in India. Here’s how you can get started:
- Visit the Post Office.
- Collect the Application Form.
- Fill Out the Form.
- Provide Necessary Documents: Submit KYC documents, such as proof of identity, proof of address, and 2 passport-size photographs.
- Deposit the Amount: Deposit your chosen investment amount, adhering to the minimum and maximum deposit limits.
- Submit the Form. Receive Account Details. The post office will process your application, and you will receive your POMIS account details.
Conclusion
The Post Office Monthly Income Scheme (POMIS) is an attractive investment option for senior citizens and anyone seeking a steady monthly income.
With guaranteed returns, high security, and easy accessibility, POMIS provides financial stability during retirement or any other stage of life where regular income is essential.
While it may not protect against inflation, its main appeal lies in offering a consistent income stream, making it a valuable option for those needing reliable cash flow.
